Alternative Investments

Question 1

Types of Alternative Investment (3)

Answer 1

1. Works of art and Collectables
2. Commodities
3. Cryptocurrency

Question 2

Characteristics of Works of art and collectables

Answer 2

1. No income generated
2. Cost money to store and insure
3. value dependant on limited supply + fluctuating demand

Question 3

Considerations when buying Collectables

Answer 3

1. Condition of object
2. Authenticity
3. Tastes change
4. Some markets dominated by small number of buyers and sellers
5. Diversification

Question 4

Define commodities and 2 types

Answer 4

1. Raw materials
2. Hard commodities - products of mining and other extractive processes
3. Soft commodities - grown rather than mined

Question 5

Risks of Commodities

Answer 5

1. Markets dominated by trading interests
2. Volatile prices
3. Political risks
4. Cyclical

Question 6

Features of Cryptocurrencies

Answer 6

1. Anonymous transactions
2. not backed by govt. or central bank
3. not regulated